S&P Global slashes Credit Suisse's rating to near-junk status as the European bank struggles against 'material execution risks'

• Credit Suisse has been knocked down to near-junk bond status by S&P Global.
• Analysts at the ratings agency said the bank's plan to restructure contained big risks.

S&P Global slashed its rating for Credit Suisse to near-junk status as the bank is struggling against "material execution risks" in its attempt to recover from recent losses.

In a note on Monday, S&P analysts knocked the troubled Swiss bank to BBB-, just one notch higher than speculative grade.

"We think Credit Suisse's banking franchise has weakened. Credit Suisse continued to show weak operating performance in the third quarter, reporting its fourth consecutive quarterly net loss with no quick recovery in sight," analysts said in the note. "We see risk of further outflows while Credit Suisse's new management team works to rebuild confidence in the bank."

Credit Suisse briefly spooked markets last month, with some investors pointing to the price of its credit-default swaps as an indicator that a Lehman Brothers-style bankruptcy was imminent.

Top bankers at the firm scrambled to assure investors that the bank's liquidity and capital positions were fine – before unveiling a "radical" restructuring plan last week. That will partly be funded by raising $4 billion, roughly equal to what the bank lost in the previous quarter.

While acknowledging the new blueprint has potential to stabilize the bank, the S&P analysts pointed to its "material execution risks," given the rough economic climate, with high inflation and persistent Fed rate hikes continuing to weigh on asset prices.

Additionally, the bank's multi-billion loss in the third quarter is a sign of deteriorating resilience, analysts said.

Other rating firms, such as Moody's and Morningstar, have also downgraded Credit Suisse, and investors are still on edge despite comments from experts that the bank's troubles would not amount to a repeat of 2008.

In an email to Insider, a Credit Suisse spokesperson said: "Credit Suisse acknowledges the rating actions taken by Moody's and S&P on November 1 in response to the bank's strategic plan, announced on Oct. 27, to restructure its investment bank, restore profitability and create a simpler, more focused and more stable bank built around client needs. The rating agencies note that the plan entails execution risk. Credit Suisse is confident that it has the right management team and capital strength, including its CHF ~4bn capital raise, to begin this strategic transformation from a position of strength."